STATE OF THE UNION: Washington Memo; Darman on Outskirts of Inner Circle

By ROBERT PEAR,

Published: January 29, 1992

WASHINGTON, Jan. 28—
For Richard G. Darman, who has been a dominant figure in shaping President Bush's domestic policy, the sudden White House order this week to rewrite an Administration statement on health policy was a rare rebuke.

It is hard to tell how seriously Mr. Darman, the President's budget director, will be damaged by the incident. But he has been momentarily humiliated, and his future influence is threatened for several reasons.

The new White House chief of staff, Samuel K. Skinner, is building a domestic policy apparatus that would reduce Mr. Darman's role by establishing a new domestic policy coordinator for the President.

Conservatives, critical of Mr. Darman for more than a decade, are stepping up their attacks on him at a time when Mr. Bush needs all the support he can get on the right. "Darman is anathema to conservatives," said Richard A. Viguerie, a master of direct-mail fund-raising for conservative candidates. Tax Increase Not Forgotten

Conservatives support some of Mr. Darman's efforts to cut Federal spending. But, said Mr. Viguerie, they see him as far too willing to "cut deals with the Washington establishment," and they have not forgiven him for negotiating a deal with Congress in 1990 that raised taxes just as the nation was entering a recession.

Mr. Darman's longtime ally in the formulation of domestic policy, John H. Sununu, is gone, replaced by Mr. Skinner last month.

In explaining why Mr. Darman has been able to dominate domestic policy, Administration officials observed that he was knowledgeable about Government programs and the intricacies of the Federal budget law. Equally important, they said, is that the President has neglected details of many domestic programs and entrusted them to him.

Health care is emerging as a volatile issue. Democrats have repeatedly criticized Mr. Bush, saying that he has failed to come up with any comprehensive health proposals. Congressional Republicans say Mr. Darman's handling of the issue embarrassed Mr. Bush, who was hoping to use the budget that he is to release Wednesday to show that he could be as decisive on domestic problems as he has been on foreign policy. 'Evidence of Indecisiveness'

Dr. Raymond Scalettar, secretary-treasurer of the American Medical Association, said today that the rewriting of the budget under duress was "evidence of indecisiveness and problems within the Administration."

On Monday, Mr. Skinner, with Mr. Bush's blessing, instructed Mr. Darman to rewrite parts of the budget that contained detailed proposals to control health costs and improve access to care for 34 million people who have no health insurance. The proposals included a tax on health insurance benefits provided by employers to high-income workers. They also included a sharp increase in Medicare premiums for affluent elderly people.

Republicans led by Representative Bill Gradison of Ohio objected to Mr. Darman's proposals as politically unwise. They also complained that the White House expected them to support the health-care package but had not consulted them on its contents.

Mr. Bush's press secretary, Marlin Fitzwater, and other White House officials made comments today that suggested they did not fully appreciate or understand the objections. Dispute? What Dispute?

Mr. Fitzwater played down the dispute. He said that Mr. Gradison "objected to one of the provisions" in the budget, the White House "agreed to take another look at it" and printing of the budget was stopped briefly to "change a paragraph."

Republicans said their concerns were much more profound than Mr. Fitzwater's comments would suggest. The concerns involve basic questions of legislative strategy and the wisdom of setting forth detailed proposals. Many Republicans say such proposals will be criticized by Democrats, labor unions and business groups, while having little chance of becoming law this year.

Relations between Mr. Darman and Mr. Skinner were already strained. "The tension between Darman and Skinner is so obvious you can see it," said an Administration official who attended a meeting with them two men last week.

Mr. Darman's job would have been in immediate jeopardy if he had not made himself almost indispensable to the President in dealing with Congress on the budget, White House officials said.

The budget director has often clashed with Republicans in the Administration and Congress. Many Republicans see a pattern of secretive maneuvering in his efforts to devise a health policy for the Administration. Aides to Dr. Louis W. Sullivan, the Secretary of Health and Human Services, say Mr. Darman relegated the Secretary to a secondary role in formulating health policy for the President. 'Social Darmanism'

Jack F. Kemp, the Secretary of Housing and Urban Development, describes the budget director's approach to domestic problems as "social Darmanism." The term recalls social Darwinism, the 19th-century theory that the human species would improve through survival of the fittest, obviating the need for government efforts to alleviate poverty.

What remains of Mr. Bush's health policy, after the excisions ordered by Mr. Skinner, is a combination of tax credits for poor people and new tax deductions for middle-income people to help them buy health insurance. But the President has no way to pay for the package, and he has no obvious way to control health costs.

Nor is there any guarantee that all Americans would actually be covered by health insurance under his plan. Mr. Bush and his aides have rejected proposals that would require employers to pay extra taxes or otherwise contribute to the cost of health care for employees.

Frederick H. Graefe, Washington counsel for the American Protestant Health Association, which represents 500 nonprofit hospitals, said today: "The apparent disarray in the Bush Administration reflects the intractability of the health-care issue. Proposals that make good health policy may not make good national politics."

Photo: Before President Bush's address to Congress last night, Richard G. Darman, the budget director, applauded as he talked with the Joint Chiefs of Staff, including the chairman, Gen. Colin Powell, lower left. Behind Mr. Darman was John H. Sununu, the former White House chief of staff. (Jose R. Lopez/The New York Times)